The Internet of Things in the automotive industry — There may still be skepticism about the IoT in some sectors, but in automotive IoT is taking up more space than ever in our vehicles. The signs are everywhere.
We are all aware of the larger trends we face in the automotive industry (faster and smarter production facilities, driverless cars and Internet of Things (IoT) as a key differentiator) but which concrete areas can automotive managers focus on here and now to become more competitive and agile today?
Logistics and Transportation: Check the hidden costs
West is moving East, East is moving West, and the implications for global automotive manufacturers are huge. Presentations from Chinese and European manufacturers at December 2015’s Odette Conference showed that European manufacturers are moving facilities further East (to Poland and Romania for example) whilst within China, manufacturers are moving facilities further West, to cut the cost of transporting completed vehicles to Europe. The presentations also showed that within China there is often no clear transportation strategy (up to 70 percent of trucks moving inside the country could be underutilized). This presents major opportunities for savings. Basic costs within China are so cheap it’s easy for auto manufacturers to overlook this, but hidden transportation costs can end up eating up savings made from relocation.
Porsche New Logistics Concept: Many manufacturers are realizing the enormous savings to be made from smarter, tighter logistics. In 2015, Porsche invented a New Logistic Concept (NLK) that it uses for the whole Volkswagen Group. NLK was based on older recommendations from the German Automotive Association (VDA). Realizing it had to change some of its messages, Audi brought in EDI Messaging to carry additional information. The new NLK now runs across the whole supply chain, from Tier One suppliers right the way up to Porsche, VW and Audi. All the SME (small to medium size enterprises) will be integrated into the information flow too. Although termed SMEs, many employ over 1,000 people, and yet still use Excel for planning and manufacturing.
The Information Technology Automotive Association in Germany promotes integrated information across the country’s automotive industry. Members include OEM manufacturers, software suppliers and SMEs, all of whom recognize that when the industry decides on new messages and labels it must provide them seamlessly to customers. By the end of 2016, the German automotive industry should have common messages and a common platform enabling layout. The days of automotive SMEs working without even an enterprise resource planning (ERP) system seem to be coming to an end.
Quality is a supplier and supply chain issue
Despite growing technological sophistication, the overall number of recalls within the industry increases year on year. As with logistics, information exchange throughout the supply chain is crucial to delivering quality and minimizing risk. Most large OEMs tend to use the same components in different models of their cars (Volkswagen has the same platform as Golf, for example). Therefore, when a component fails it doesn’t just affect one brand, but many. If an engineer in the OEM changes a component in his drawings it is essential that this information is transferred and acted on by all players right the way through the supply chain.
Suppliers, as well as OEMs, must prioritize information exchange and embrace software integration and planning tools. A good example of this in action is Audi. The entire front of an Audi (including indicators, lights and chassis) is delivered by one supplier. Audi insists suppliers use one of a small handful of product data management (PDM) solutions, so everyone in the supply chain can access the same data.
IoT raises the bar for flexibility
Say goodbye to the car as a device for getting us from A to B and say hello to the car as an app. There may still be skepticism about IoT in some sectors, but in automotive IoT is taking up ever more space in our vehicles. The signs are everywhere:
- Over the next five years, Toyota will invest 1 billion USD in artificial intelligence for self-driving cars.
- Audi is developing a virtual instrument panel to replace their old ones, where one large screen, free of buttons, permanently connects smartphone and vehicle.
- General Motors’ all-electric vehicle Bolt EV will replace rearview mirrors with a fully digital display.
- Gartner predicts that within five years all new vehicles will be automatically integrated with drivers’ calendars so that servicing and refueling will be scheduled automatically.
Science fiction? Of course not. My present BMW already notifies me when I have a service issue, displaying the fault on my dashboard and advising me to contact my dealer. Nevertheless, IoT offers urgent opportunities to OEMs beyond consumer-facing news too.
IoT in the production process will be impacted heavily by 3D printing, particularly in the spare parts and aftermarket segments. One of our customers already prints out provisional spare parts to be used for interim repairs, and Siemens uses 3D printing to produce power tubing.
The demand for more agile, flexible, lightweight production capabilities is set to increase: German 3D printing company Schlemmer made headlines and won a VDA (German Association of the Automotive Industry) Logistics Award when it built and mounted an entire 3D production unit onto a truck that was able to move from factory to factory across Russia. Yes, it was manufacturing plastic tubing, not a sophisticated product, but remembers that, 1) Schlemmer did this in 2008, and 2) in 2015 the world’s first automobile was 3D printed. It wasn’t state-of-the-art, but it was fully functioning and the whole thing was printed within 48 hours.
Finally, when it comes to IoT, we hear a lot about driverless vehicles. However, the fast-growing capability of “driverless logistics” is often overlooked. Germany’s prestigious and innovative Fraunhofer Institute now has a completely ‘driverless’ warehouse and supply chain. If you’re wondering how big the logistics operation for a Research Institute can be – well, Fraunhofer employs 24,000 people and has an annual research budget of over 2.1 billion euros…
I define four flows that are crucial to the success of automotive: First, the flow of demand. This then creates a flow of goods, which, once produced, drives the flow of money. But between all three, and crucial to the success of each, is the fourth flow: information. Everywhere, from demand, to supply to production, there has to be an effective flow of information that reaches everyone in the supply chain. Without it the other flows stop – so checking the flow of information in logistics, transportation and quality today could pay serious dividends tomorrow.